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PURCHASE AGREEMENT
BETWEEN
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP,
A CALIFORNIA LIMITED PARTNERSHIP
(THE "PARTNERSHIP"),
AND
GLENBOROUGH REALTY TRUST INCORPORATED,
A MARYLAND CORPORATION
AND
GLENBOROUGH PROPERTIES, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP
(COLLECTIVELY, "PURCHASER")
RELATING TO THE PROPERTIES
COMMONLY KNOWN AS
GATEWAY PROFESSIONAL CENTER, SACRAMENTO, CALIFORNIA
PARK PLAZA, SACRAMENTO, CALIFORNIA
POPLAR TOWERS, MEMPHIS, TENNESSEE
AND
TOTEM VALLEY BUSINESS PARK, SEATTLE, WASHINGTON
AND INTERESTS IN THE ENTITIES KNOWN AS
MONTROSE OFFICE PARK LIMITED PARTNERSHIP,
A MARYLAND LIMITED PARTNERSHIP
MONTROSE OFFICE PARK JOINT VENTURE,
A MARYLAND SINGLE PURPOSE GENERAL PARTNERSHIP
AND
EQUITEC VENTURE CORP. III, INC.,
A CALIFORNIA CORPORATION
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PURCHASE AGREEMENT
PRUDENTIAL-BACHE/EQUITEC
TABLE OF CONTENTS
Page
----
List of Addenda........................................................... ii
List of Exhibits.......................................................... iii
List of Schedules......................................................... iv
1. Definitions.......................................................... 1
2. Agreement to Purchase and Sell....................................... 1
3. Consideration........................................................ 1
4. Conditions to Closing/Totem Valley Lease............................. 3
5. Closing and Escrow................................................... 4
6. Closing Adjustments and Prorations................................... 6
7. The Partnership's Representations and Warranties/Property Condi
tion................................................................. 8
8. Purchaser's Representations and Warranties........................... 10
9. Indemnification by Purchaser......................................... 12
10. Risk of Loss......................................................... 12
11. Condemnation......................................................... 13
12. The Partnership's Continued Operation of the Properties.............. 14
13. Cooperation Before Closing........................................... 15
14. Non-Consummation of the Transaction.................................. 15
15. Miscellaneous........................................................ 16
Addenda
Exhibits
Schedules
i
LIST OF ADDENDA
I. Definitions
ii
LIST OF EXHIBITS
A. Assignment and Assumption of Leases
B. ▇▇▇▇ of Sale
C. Assignment and Assumption of Service Contracts,
Warranties and Guaranties, and Other Intangible Property
D. Certificate of the Partnership Other Than an Individual
(FIRPTA Affidavit)
E. Assignment of Partnership Interests in Montrose Office Park Limited
Partnership
F. Assignment of Joint Venture/General Partnership Interests in Montrose
Office Park Joint Venture
G. Escrow Agreement
iii
LIST OF SCHEDULES
SCHEDULES REFERENCED IN ADDENDUM I (DEFINITIONS)
1. Description of Land
2. Permitted Exceptions
3. Rent Roll
4. Deferred Maintenance
5. Loan
6. Description of Related Property
iv
PURCHASE AGREEMENT
PRUDENTIAL-BACHE/EQUITEC
THIS PURCHASE AGREEMENT ("Agreement") is dated as of the Effective Date (as
defined in Addendum I hereto) by and among Prudential-Bache/Equitec Real Estate
Partnership, a California limited partnership (the "Partnership") and
Glenborough Realty Trust Incorporated, a Maryland corporation ("GLB") and
Glenborough Properties, L.P., a California limited partnership ("GPLP")
(collectively, "Purchaser").
RECITALS
A. Purchaser desires to acquire the Property (as defined in Addendum I
below) and the Interests (as defined in Addendum I attached hereto) (the
Interests, together with the Property, the "Assets") from the Partnership and
the Partnership desires to sell the Assets to Purchaser, upon the terms and
subject to the conditions set forth in this Agreement (the "Sale").
B. Following such Sale, the Partnership intends to liquidate itself and
distribute its net assets (including the proceeds of such Sale) to its General
Partners (as defined in Addendum I attached hereto) and the holders of the
beneficial ownership interest in the limited partnership interests of the
Partnership (the "Unitholders").
NOW, THEREFORE, in consideration of the premises, the mutual
representations, warranties, covenants and agreements hereinafter contained, and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged and intending to be legally bound, the parties hereby agree
as follows:
1. DEFINITIONS. Terms used in this Agreement shall have the meanings set
forth in Addendum I attached hereto.
2. AGREEMENT TO PURCHASE AND SELL. Subject to and upon the terms and
conditions herein set forth and the representations and warranties contained
herein, the Partnership agrees to sell the Assets to Purchaser, and Purchaser
agrees to acquire the Assets from the Partnership.
3. CONSIDERATION. The Partnership and Purchaser agree that the total
Consideration for the Assets shall be Forty Three Million Five Hundred Twenty
Thousand
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Dollars ($43,520,000), subject to adjustment for Deferred Maintenance and other
matters as provided herein.
(a) The Consideration shall be comprised of the following components:
(i) ▇▇▇▇▇▇▇ MONEY DEPOSIT. Within one (1) business day of the
Effective Date, Purchaser shall deposit the ▇▇▇▇▇▇▇ Money in escrow
with the Title Company and shall cause the Title Company to provide
the Partnership with written confirmation on such date that it has
received same. The ▇▇▇▇▇▇▇ Money shall be held in a federally insured
interest-bearing account and interest accruing thereon shall be for
the party entitled thereto pursuant to the terms of this Agreement and
the Escrow Agreement. The ▇▇▇▇▇▇▇ Money shall be in the form of cash.
In the event the transaction contemplated hereby is consummated, the
▇▇▇▇▇▇▇ Money plus interest accrued thereon shall be credited against
Purchaser's payment obligations hereunder.
(ii) THE LOAN. Provided that the Partnership receives, at
Purchaser's expense, the written consent of the holder of the Loan to
the Sale not less than thirty (30) days prior to the Closing Date, and
subject to delivery of the Release as provided herein, at the Closing,
there shall be credited against the Consideration an amount equal to
the greater of (i) all amounts claimed by the holder of the Loan as of
the Closing Date (other than prepayment fees or similar charges
including but not limited to the Fixed Rate Price Adjustment) under a
payoff demand submitted to the Title Company and approved by the
Partnership, or (ii) the outstanding principal balance of the Loan,
together with all accrued unpaid interest thereon as of the Closing
Date, and all late charges, penalties or other charges (other than
prepayment fees or similar charges including but not limited to the
Fixed Rate Price Adjustment) owing under the Loan. In such event, the
Loan shall be the responsibility of Purchaser, which may, at its
option, acquire the Property subject to the Loan, seek to assume the
Loan, refinance the Loan contemporaneously with or after the Closing,
retire the Loan at the Closing, or take any other actions with respect
to the Loan in whatever manner it sees fit. Should Purchaser assume
the Loan, the cost of any assumption fee or related costs shall be the
obligation of Purchaser. Any costs related to the Release shall be the
obligation of Purchaser. Should Purchaser refinance the Loan, any
costs related to such refinancing shall be the obligation of
Purchaser. Should Purchaser retire the Loan, any
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prepayment penalty or similar charge including but not limited to the
Fixed Rate Price Adjustment shall be the obligation of Purchaser. In
no event shall the Release or the Purchaser's ability to assume,
retire or refinance the Loan be a condition to Purchaser's obligations
hereunder.
(iii) CASH. On the Closing Date, Purchaser shall deliver to the
Partnership, immediately available funds in an amount equal to the
Consideration less (i) the ▇▇▇▇▇▇▇ Money Deposit, as more fully
described above and (ii) the amount of the Loan credit as calculated
above, and subject to closing adjustments and prorations pursuant to
Subsection 6(c) hereof.
(b) WITHHOLD IF THE PARTNERSHIP A FOREIGN PERSON. The Partnership
acknowledges and agrees that, if the Partnership is a foreign person,
Purchaser may be required to withhold a portion of the Consideration
pursuant to Section 1445 of the Internal Revenue Code of 1986, as amended
(the "Code") or Sections 18805 and 26131 of the California Revenue and
Taxation Code or similar laws or regulations of other states.
(c) ALLOCATION OF CONSIDERATION. The Partnership and Purchaser agree
to allocate the Consideration as follows, subject to adjustment as provided
herein, in accordance with Section 1060 of the Code: Gateway Professional
Center - $4,250,000; Park Plaza - $6,670,000; Poplar Towers - $5,000,000;
Totem Valley Business Park - $7,200,000; Interest in Montrose Office Park
Joint Venture - $19,155,600; Interest in Montrose Office Park Limited
Partnership - $1,244,300; Interest in Equitec Venture Corp. III, Inc. -
$100. Neither the Partnership nor Purchaser shall file any tax return or
other document or otherwise take any position which is inconsistent with
the allocation determined pursuant to this Subsection.
4. CONDITIONS TO CLOSING/TOTEM VALLEY LEASE.
(a) PURCHASER'S CONDITIONS PRECEDENT. Purchaser's Conditions Precedent
as set forth below are precedent to Purchaser's obligation to acquire the
Assets. The Purchaser's Conditions Precedent are intended solely for the
benefit of Purchaser. If any of the Purchaser's Conditions Precedent are
not satisfied, Purchaser shall have the right in its sole discretion either
to waive such Purchaser's Condition Precedent and proceed with the Sale or
terminate this Agreement by written notice to the Partnership and the Title
Company.
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(i) DELIVERIES BY PARTNERSHIP. The Partnership shall fulfill
in all material respects its obligations under Section 5(c)
hereof, except as otherwise set forth herein.
(ii) TITLE POLICY. Title Company shall be committed to issue
a Title Policy at Closing for each Property showing fee or
leasehold title, as applicable, to such insured Property vested
in Purchaser, subject to the Permitted Exceptions.
(iii) DEFERRED MAINTENANCE. The Partnership shall have
completed or shall cause to be completed the Deferred Maintenance
on the Properties and the Related Property, or, to the extent
such work has not been completed, Purchaser shall receive a
credit at Closing, which credit shall be calculated based upon
the agreed valuations set forth in Schedule 4.
(iv) NO ORDERS, ETC. No stay, order, judgment or decree
shall have been entered, and not vacated, by a court or
administrative agency or other governmental body, in any action
which enjoins, materially restrains or prohibits the consummation
of the Sale.
(v) REQUIRED CONSENTS. All material authorizations,
consents, permits and approvals of all federal, state and local
governmental agencies and authorities required to be obtained in
order to permit consummation of the Sale shall have been
obtained.
(b) THE PARTNERSHIP'S CONDITIONS PRECEDENT. The Partnership's
Conditions Precedent as set forth below are precedent to the
Partnership's obligation to transfer the Assets, and are intended
solely for the benefit of the Part nership. If any of the
Partnership's Conditions Precedent are not satisfied, the Partnership
shall have the right in its sole discretion either to waive such
Partnership's Condition Precedent and proceed with the Sale or
terminate this Agreement by written notice to Purchaser and the Title
Company.
(i) LIMITED PARTNER CONSENT. The Partnership shall have
received the Consents on or before December 4, 1997.
(ii) AMENDMENTS. The Amendment shall have been approved by
the Unitholders and executed by the General Partners before
Closing.
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(iii) RELEASE. If the Loan is not retired at Closing, the
Partner ship shall have received a duly executed release in form
and substance acceptable to the Partnership, pursuant to which
Purchaser and the holder of the Loan as of the Closing Date shall
release the Partnership, PB Properties and the Unitholders from
any and all obligations and liabilities under the Loan Documents
whether arising before, on or after the Closing Date (the
"Release").
(iv) NO ORDERS, ETC. No stay, order, judgment or decree
shall have been entered, and not vacated, by a court or
administrative agency or other governmental body, in any action
which enjoins, restrains or prohibits the consummation of the
Sale.
(v) REQUIRED CONSENTS. All authorizations, consents, permits
and approvals of all federal, state and local governmental
agencies and authorities required to be obtained in order to
permit consummation of the Sale shall have been obtained.
(vi) DELIVERIES BY PURCHASER. The Partnership shall have
received the balance of the total Consideration and the duly
executed docu ments to be delivered by Purchaser pursuant to
Section 5 hereof.
(vii) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Purchaser shall have been true and correct in
all material respects when made and shall be true and correct in
all material respects as of the Closing Date, as if made at and
as of such date.
(c) TOTEM VALLEY LEASE. Notwithstanding anything to the contrary
contained herein, (i) the consent of the landlord under the Totem Valley
Lease to an assignment of such lease shall in no event be a condition to
Purchaser's obligation to close hereunder, and (ii) in the event that the
landlord under the Totem Valley Lease exercises its right to terminate such
lease without cause prior to or after Closing, no such termination shall
effect the obligations of Purchaser hereunder or entitle the Purchaser to
any credit or offset against the Consideration. The provisions of clause
(ii) of this subparagraph shall survive the Closing.
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5. CLOSING AND ESCROW.
(a) CLOSING DATE. The Closing shall be conducted through, and all
items to be delivered shall be delivered to, the Title Company, on or
before the Closing Date, which may be extended upon mutual written
agreement of the parties.
(b) ESCROW INSTRUCTIONS. Title Company shall hold the ▇▇▇▇▇▇▇ Money in
accordance with the provisions of the Escrow Agreement. The Partnership and
Purchaser hereby designate Title Company as the Reporting Person for the
transaction pursuant to Section 6045(e) of the Internal Revenue Code and
the regulations promulgated thereunder.
(c) THE PARTNERSHIP'S DELIVERIES TO ESCROW. At or before the Closing,
the Partnership shall deliver to escrow the following, to the extent they
have not already been delivered:
(i) the duly executed and acknowledged Deeds for each Property
(except with respect to the portion of one of the Properties leased
by the Partnership under the Totem Valley Lease);
(ii) a duly executed and acknowledged Assignment and Assumption
of Lease with respect to the Totem Valley Lease;
(iii) duly executed Assignments of Leases for each Property;
(iv) duly executed Bills of Sale for each Property;
(v) duly executed Assignments of Contracts for each Property;
(vi) a FIRPTA affidavit (in the form attached as Exhibit E)
pursuant to Section 1445(b)(2) of the Internal Revenue Code of 1986
(the code), and on which Purchaser is entitled to rely, that the
Partnership not a foreign person within the meaning of Section
1445(f)(3) of the Code;
(vii) a California Form 590 (or equivalent form for another
appropriate state) from Purchaser certifying that the Partnership has
a permanent place of business in California or such other state and is
qualified to do business in California or such other state;
(viii) the certificates representing 100% of the issued and
outstanding shares of Equitec Venture Corp. III, Inc., duly endorsed
by the Partnership in blank, or accompanied by stock powers duly
executed by the Partnership in blank;
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(ix) the Interests Transfer Documents, duly executed by the
Partnership as indicated; and
(x) such original resolutions, authorizations, bylaws or other
corporate and/or partnership documents or agreements relating to the
Partnership as shall be reasonably required by Purchaser and/or the
Title Company in connection with its issuance of each Title Policy.
(d) PURCHASER'S DELIVERIES TO THE PARTNERSHIP. At or before the
Closing, Purchaser shall deliver or cause to be delivered to escrow the
following:
(i) a duly executed and acknowledged Assignment and Assumption of
Lease with respect to the Totem Valley Lease;
(ii) a duly executed Assignment of Leases for each Property;
(iii) such original resolutions, authorizations, bylaws or other
corporate and/or partnership documents or agreements relating to
Purchaser as shall be reasonably required by the Partnership;
(iv) a duly executed Assignment of Service Contracts for each
Property;
(v) if the Loan is not retired at Closing, the Release; and
(vi) the Cash.
(e) PAYMENT OF TAXES. Purchaser shall obtain any stock transfer stamps
required and shall properly file, with the cooperation of the Partnership,
on a timely basis all necessary tax returns, reports and forms and other
documentation with respect to any stamp, transfer, notarial, documentary,
sales, use, registration and other similar taxes or fees incurred in
connection with the transfer of the Interests, and shall provide to the
Partnership appropriate invoices evidencing all payments in connection
therewith.
(f) DEPOSIT OF OTHER INSTRUMENTS. The Partnership and Purchaser shall
each deposit such other instruments as are reasonably required by Title
Company in connection with its issuance of each Title Policy, provided,
however, the Partnership shall have no obligation to execute any owner's
affidavits or any indemnity required in order to remove "gap" or
"creditors' rights" exceptions.
6. CLOSING ADJUSTMENTS AND PRORATIONS. With respect to each Property and
the Related Property, the following adjustments shall be made to the
Consideration, and the following procedures shall be followed:
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(a) BASIS OF PRORATIONS. All prorations shall be calculated as of
12:01 a.m. on the Closing Date, on the basis of a 360-day year.
(b) ITEMS NOT TO BE PRORATED. The Partnership will not assign to
Purchaser any of the hazard insurance policies affecting the Properties or
the Related Property in force as of the Closing Date. Therefore, there
shall be no prorations or adjustments of any kind with respect to insurance
premiums.
(c) CLOSING ADJUSTMENTS. Prior to Closing, Purchaser shall prepare for
review, comment and agreement by the Partnership a proration statement for
each Property and the Related Property, and each party shall be credited or
charged at the Closing, in accordance with the following:
(i) RENTS. The Partnership shall account to Purchaser for any
Rents actually collected by the Partnership or its affiliates for the
rent period in which the Closing occurs, and Purchaser shall be
credited for its share.
(ii) EXPENSES.
a) PREPAID EXPENSES. To the extent Expenses have been paid
prior to the Closing Date for the payment period in which the
Closing occurs, the Partnership shall account to Purchaser for
such prepaid Expenses, and the Partnership shall be credited for
its pro rata share thereof for the period after the Closing Date.
b) NON-DELINQUENT UNPAID EXPENSES. To the extent
non-delinquent Expenses relating to the payment period in which
the Closing occurs are unpaid as of the Closing Date but have
been billed or are subject to reasonably accurate estimation as
outlined below, Purchaser shall be credited for the Partnership's
pro rata share of such non-delinquent Expenses for the period
prior to the Closing Date (unless already credited pursuant to
Section 3(a)(ii)). Purchaser agrees to attempt to obtain partial
bills which detail such unpaid Expenses through the Closing Date.
To the extent Purchaser is unable to obtain such partial bills,
Purchaser agrees to prepare an estimate of such Expenses relating
to the payment period in which the Closing occurs, provided that
such an estimate may be made with reasonable accuracy based upon
prior bills and courses of
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dealing, and provided further that the Partnership approves the
estimate.
c) PROPERTY TAXES. For purposes of this Subsection 6(c)(ii)
hereof, the Title Company shall pro-rate property taxes based on
the most recent available tax bills.
d) DELINQUENT EXPENSES. Delinquent Expenses shall not be
adjusted or prorated and shall be borne by the Purchaser.
(iii) SECURITY DEPOSITS. The Partnership shall deliver
to Purchaser all security deposits, letters of credit and
other collateral given to the Partnership under any of the
Leases to the extent not applied pursuant to the terms of
the Leases prior to the Closing Date.
(iv) TOTEM VALLEY LEASE. All rents, charges and other sums
due under the Totem Valley Lease shall be prorated as of the
Closing Date. Purchaser acknowledges that rent under the Totem
Valley Lease is payable annually in advance and that the
Partnership shall be entitled to a credit for its pro rata share
of such prepaid rent.
(d) POST-CLOSING ADJUSTMENTS. After the Closing Date and
continuing for a period of thirty (30) days thereafter, but in no
event after December 26, 1997, the Partnership and Purchaser shall
meet from time to time to discuss adjust ments in accordance with the
following;
(i) NON-DELINQUENT RENTS. If Purchaser collects any
non-delinquent Rents applicable to the month in which the Closing
occurred, the Partnership's pro rata share of such Rents shall be
paid to the Partnership immediately upon receipt.
(ii) DELINQUENT RENTS. If Purchaser collects from any Tenant
Rents that were delinquent as of the Closing Date, then such
Rents shall be applied in the following order of priority: first,
to reimburse Purchaser for all reasonable out-of-pocket
third-party collection costs actually incurred by Purchaser in
collecting such Rents; second, to satisfy such Tenant's
delinquent Rent obligations relating to the period before the
Closing Date; and third, to satisfy such delinquent Rent
obligations relating to the period including and after the
Closing Date. The Partnership shall have no right
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to pursue the collection of such delinquent Rents. Purchaser
agrees to actively pursue collection of such delinquent Rents.
(iii) SURVIVAL OF OBLIGATIONS. The obligations of the
Partnership and Purchaser under Subsection 6(d) hereof shall
survive the Closing for a period of thirty (30) days, but in no
event later than December 26, 1997, and all such adjustments and
payments to the entitled party shall be made prior to that time.
(e) ALLOCATION OF CLOSING COSTS. Closing costs shall be allocated as
set forth below; provided, however, that in the event that any real
property transfer taxes which would be due in connection with the transfer
of the Related Property are due with respect to the transfer of the
Interests, such real property transfer taxes shall be the responsibility of
Purchaser, notwithstanding any contrary local custom:
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Responsible Party
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Gateway
Closing Prof. Poplar Totem
Expense Center Park Plaza Towers Valley Interests
------- ------- ---------- ------ ------ ----------
Escrow Charges Equal Split Equal Split Equal Split Equal Split Equal
Split
Title Charges Partnership Partnership Purchaser Partnership Purchaser
Transfer Taxes Equal Split Equal Split Purchaser Partnership Equal
Split
Recording Fees Purchaser Purchaser Purchaser Purchaser N/A
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The provisions of this Subsection 6(e) shall survive the Closing.
(f) ADJUSTMENTS REGARDING INTERESTS. Except as specifically set forth
herein with respect to adjustments, prorations or credits to the Consider
ation based upon operations related to the Related Property, there shall be
no adjustments, credits or prorations to the Consideration with respect to
the transfer of Interests. On and after the Closing all liabilities, debts,
obligations, expenses and payables of Montrose Office Park Joint Venture,
Montrose Office Park Limited Partnership and Equitec Venture Corp. III,
Inc., and of the
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Partnership with respect to the Interests, whether accruing on, before or
after the Closing Date, including but not limited to liabilities for Taxes,
shall be borne by Purchaser, and Purchaser shall indemnify and hold the
Partnership, PB Properties and the Unitholders harmless with respect
thereto, provided, however, that the Partnership shall remain liable for
any taxes with respect to the Partnership's income or capital gains derived
from the transfer of the Interests. The provisions of this Subsection 6(f)
shall survive the Closing.
7. THE PARTNERSHIP'S REPRESENTATIONS AND WARRANTIES/PROPERTY CONDITION.
(a) ORGANIZATION AND AUTHORIZATION. The Partnership hereby represents
and warrants to Purchaser the matters set forth below:
(i) The Partnership is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of
California, and is qualified to do business in the State of
California.
(ii) The Partnership has full partnership power and authority to
execute and deliver this Agreement and to perform all of the terms and
conditions hereof to be performed by the Partnership and to consummate
the transactions contemplated hereby. This Agreement and all documents
executed by the Partnership which are to be delivered to Purchaser at
Closing are or as of the Closing Date will be duly executed and
delivered by the Partnership and are or at the time of Closing will be
the legal, valid and binding obligation of the Partnership and is
enforceable against the Partnership in accordance with its terms,
except as the enforcement thereof may be limited by applicable
Creditors' Rights Laws. The Partnership is not presently subject to
any bankruptcy, insolvency, reorganization, moratorium, or similar
proceeding.
(iii) The individuals executing this Agreement and the
instruments referenced herein on behalf of the Partnership and its
constituent entities, if any, have the legal power, right and actual
authority to bind the Partnership to the terms and conditions hereof
and thereof.
(iv) Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated by this Agreement, nor
the compliance with the terms and conditions hereof will (a) violate
or
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conflict, in any material respect, with any provision of the
Partnership's organizational documents or any statute, regulation or
rule, or, to the Partnership's actual knowledge, any injunction,
judgment, order, decree, ruling, charge or other restrictions of any
government, governmental agency or court to which the Partnership is
subject, and which violation or conflict would have a material adverse
effect on the ownership and operation of the Property, or (b) to the
Partnership's actual knowledge result in any material breach or
termination of any agreement or other instrument or obligation to
which the Partnership is a party (other than any lease) or cause a
lien or other encumbrance to attach to any of the Property, or violate
the terms and provisions of the organizational documents of Montrose
Office Park Limited Partnership, Montrose Office Park Joint Venture or
Equitec Venture Corp. III, Inc., a California corporation, which would
have a material adverse effect on the ownership of the Property. To
the Partnership's actual knowledge, the Partnership is not a party to
any contract or subject to any other legal restriction that would
prevent fulfillment by the Partnership of all of the material terms
and conditions of this Agreement or compliance with any of the
material obligations under it.
(v) The Partnership is not a "foreign person" within the meaning
of Section 1445(f)(3) of the Code.
(b) PROPERTY CONDITION. The Property is being sold and conveyed by
Purchaser to the Partnership "AS IS, WHERE IS, WITH ALL FAULTS", in such
condition as the same may be on the Closing Date, without any
representations and warranties by the Partnership as to any conditions of
the Property, including, without limitation, surface and subsurface
environmental conditions, whether latent or patent. The Partnership makes
no guarantee, warranty or representation, express or implied, as to the
quality, character, or condition of the Property (or any part thereof) or
the fitness of the Property (or any part thereof) for any use or purpose or
any representation as to the nonexistence of any toxic or hazardous waste.
Purchaser shall have no claim, in law or in equity against the Partnership,
PB Properties or the Unitholders, based upon the condition of the Property
or the failure of the Property to meet any standards. In no event shall the
Partnership, PB Properties or the Unitholders be liable for any incidental,
special, exemplary or consequential damages, including, without limitation,
loss of profits or revenue, interference with business operations, loss of
tenants, lenders, investors, buyers, diminution in
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value of the Property, or inability to use the Property, due to the
condition of the Property. Purchaser represents and warrants to the
Partnership that Purchaser has had ample opportunity to make a proper
inspection, examination and investigation of the Property to familiarize
itself with its condition. Purchaser agrees that it accepts the condition
of the Property hereunder, and it shall purchase and accept title to the
Property including any and all environmental conditions. In the event that
any hazardous substances are discovered on, at or under the Property,
Purchaser shall not maintain any action or assert any claim against the
Partnership, its successors and their respective members, employees and
agents or PB Properties or the Unitholders arising out of or relating to
any such hazardous substances, including, without limitation, any action or
claim for contribution or the generation, use, handling, treatment,
removal, storage, decontamination, cleanup, transport or disposal thereof.
(c) TITLE TO INTERESTS. To the Partnership's actual knowledge, the
Interests are not subject to any liens, encumbrances or claims of creditors
other than restrictions on transfer, if any, arising out of federal and
state securities laws.
(d) NO OTHER REPRESENTATIONS OR WARRANTIES. Except as may be expressly
set forth herein, neither the Partnership nor any of its affiliates, agents
or representatives has made, and neither are making any representation or
warranty, written or oral, express or implied, whether of merchantability,
quality, suitability or fitness for a particular purpose, with respect to
the Property, the Loan, the Related Property, the Interests, any assets,
properties, liabilities, business, financial condition or prospects of the
entities related to the Interests or any other matter whatsoever, and in
making its decision to enter into this Agreement and consummate the Sale,
Purchaser has not relied upon any representation, warranty, statement,
advice, document, projection or other information of any type provided by
the Partnership or its affiliates, agents or representatives other than the
representations, warranties, covenants and other agreements expressly set
forth in this Agreement, provided, however, the Partnership makes no
representation or warranty with respect to the accuracy of Schedules 3, 4,
5 and 6 hereto, or to any Schedule which may be attached to Exhibits B or C
hereto.
8. PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser hereby represents
and warrants to the Partnership as follows:
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(a) GPLP is a duly organized and validly existing limited partnership
in good standing under the laws of the State of California, and GLB is a
duly organized and validly existing corporation under the laws of the State
of Maryland. This Agreement and all documents executed by Purchaser which
are to be delivered to the Partnership at the Closing are or at the time of
Closing will be duly authorized, executed and delivered by Purchaser, and
are or at the Closing will be legal, valid and binding obligations of
Purchaser enforceable against Purchaser in accordance with their terms,
except as the enforcement thereof may be limited by applicable Creditor's
Rights Laws, and do not and at the time of Closing will not violate any
provisions of any agreement or judicial order to which Purchaser is
subject. Purchaser is not presently subject to any bankruptcy, insolvency,
reorganization, moratorium or similar proceeding.
(b) Purchaser has made an independent investigation with regard to the
Assets and Purchaser's intended use thereof.
(c) There is no litigation pending or, to Purchaser's knowledge after
reasonable inquiry, threatened, against Purchaser or any basis therefor
that might materially and detrimentally affect the ability of Purchaser to
perform its obligations under this Agreement. Purchaser shall notify the
Partnership promptly of any such litigation of which Purchaser becomes
aware.
(d) Purchaser has adequate funds or available credit resources
(independent of the existing Loan) to pay the Consideration (without credit
for the Loan) on the Closing Date as provided herein.
(e) The individuals executing this Agreement and the instruments
referenced herein on behalf of Purchaser and its constituent entities, if
any, have the legal power, right and actual authority to bind Purchaser to
the terms and conditions hereof and thereof.
(f) Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated by this Agreement, nor the
compliance with the terms and conditions hereof will (a) violate or
conflict with any provision of Purchaser's organizational documents or any
statute, regulation or rule, or, to Purchaser's knowledge after reasonable
inquiry, any injunction, judgment, order, decree, ruling, charge or other
restrictions of any government, governmental agency or court to which
Purchaser is subject, or (b) result in any breach or the termination of any
lease, agreement or other instrument or
14
obligation to which Purchaser is a party or by which any of the Property
may be subject, or cause a lien or other encumbrance to attach to any of
the Property, or violate the terms and provisions of the organizational
documents of Montrose Office Park Limited Partnership, Montrose Office Park
Joint Venture, Equitec Venture Corp. III, Inc. or Purchaser. Purchaser is
not a party to any contract or subject to any other legal restriction that
would prevent fulfillment by Purchaser of all of the terms and conditions
of this Agreement or compliance with any of the obligations under it.
(g) All representations and warranties set forth herein shall be true
as of the Effective Date and the Closing Date.
9. INDEMNIFICATION BY PURCHASER. Purchaser agrees to indemnify the
Partnership, PB Properties and the Unitholders and defend and hold the
Partnership, PB Properties and the Unitholders harmless from any claims, losses,
demands, liabilities, costs, expenses, penalties, damages and losses, including,
without limitation, attorneys fees, asserted against, incurred or suffered by
the Partnership resulting from or arising out of (i) Purchaser's inspection of
the Properties and the Related Property prior to or on the Closing Date; (ii)
the operation and maintenance of the Property and the Related Property by
Purchaser on and after the Closing Date, including but not limited to any
personal injury or property damage first occurring in, on or under the Property
or the Related Property during Purchaser's ownership thereof, from any cause
whatsoever; (iii) the failure of Purchaser to perform any obligations under the
Loan Documents to be performed by the borrower after the Closing Date; (iv) any
act or omission to act whether before or after Closing with respect to the
Interests; (v) provided the Partnership maintains all insurance currently
maintained by the Partnership with respect to the Properties and the Related
Property through the Closing Date, the operation and maintenance of the Property
and the Related Property prior to the Closing Date, including but not limited to
any personal injury or property damage from any cause whatsoever, and (vi) any
claim of default or breach of lease, and any acts or omissions by the landlord
under the Totem Valley Lease which relate to or arise out of the assignment of
such lease hereunder without the consent of the landlord. The provisions of this
Section shall survive the Closing or in the case of clause (i) any termination
of this Agreement.
15
10. RISK OF LOSS.
(a) NOTICE OF LOSS. If, prior to the Closing Date, any portion of the
of the Property or the Related Property suffers a Minor or Major Loss,
Purchaser shall immediately notify the Partnership of that fact, which
notice shall include sufficient detail to apprise the Partnership of the
current status of the Property or the Related Property, as applicable,
following such loss.
(b) MINOR LOSS. Purchaser's obligations hereunder shall not be
affected by the occurrence of a Minor Loss, provided that: (i) upon the
Closing, there shall be a credit against the Consideration equal to the
amount of any insurance proceeds collected by the Partnership or its
affiliates as a result of such Minor Loss. If the proceeds have not been
collected as of the Closing, then the Partnership's or its affiliates'
right, title and interest to such proceeds shall be assigned to Purchaser.
(c) MAJOR LOSS. In the event of a Major Loss, the Partnership shall
have the option to adjourn the Closing Date for such reasonable period as
may be required to repair the Major Loss, or if the Partnership elects not
to repair the Property, Purchaser may, at its option to be exercised by
written notice to the Partnership within twenty (20) days of the
Partnership's notice to Purchaser of its election, elect to either (i)
terminate this Agreement, or (ii) consummate the acquisition of the Assets
in accordance with the terms hereof for the full Consideration, subject to
the following. If Purchaser elects to proceed with the acquisition of the
Assets in accordance with the terms hereof, then the Closing shall be
postponed to the later of the Closing Date or the date which is five (5)
days after Purchaser makes such election and, upon the Closing, Purchaser
shall be given a credit against the Consideration equal to the amount of
any insurance proceeds collected by the Partnership or its affiliates as a
result of such Major Loss. If the proceeds have not been collected as of
the Closing, then the Partnership's or its affiliates' right, title and
interest to such proceeds shall be assigned to Purchaser, and the
Partnership will cooperate with Purchaser as reasonably requested by
Purchaser in the collection of such proceeds. If
16
Purchaser fails to give the Partnership notice within such 20-day period,
then Purchaser will be deemed to have elected to terminate this Agreement.
11. CONDEMNATION
If, prior to the Closing Date, all or any portion of any Property or the
Related Property is condemned or taken by eminent domain, then this
Agreement shall nevertheless remain in full force and effect without any
abatement of the Consideration. In such event, the Partnership shall convey
such Property to Purchaser at the Closing in its then condition, and,
subject to the rights of the holder of the Loan, Purchaser shall be
entitled to receive all net or condemnation awards otherwise payable to
the Partnership or its affiliates as a result of such loss or damage and,
in full satisfaction of any claims by Purchaser against the Partnership,
the Partnership or its affiliates shall assign to Purchaser, without
recourse or warranty of any nature whatsoever, all of the Partnership's or
its affiliates' right, title and interest in and to any claims the
Partnership may have to any condemnation awards, as well as all rights or
pending claims of the Partnership or its affiliates with respect to such
condemnation or taking of such Property, and the Partnership or its
affiliates shall pay to Purchaser all payments theretofore made by such
condemning authorities as a result of such loss after deducting therefrom
the costs of collection thereof.
12. THE PARTNERSHIP'S CONTINUED OPERATION OF THE PROPERTIES.
(a) GENERAL. Except as otherwise contemplated or permitted by this
Agreement or approved by Purchaser in writing, from the Effective Date to
the Closing Date, the Partnership or its affiliates will operate, maintain,
repair and lease each of the Properties and the Related Property in a
prudent manner, in the ordinary course of business, on an arm's-length
basis and consistent with its past practices (and without limiting the
foregoing, the Partnership or its affiliates shall, in the ordinary course,
negotiate with prospective tenants and enter into leases of the Property
and the Related Property, enforce leases in all material respects including
eviction proceedings against all Tenants with delinquencies in excess of 30
days, pay all costs and expenses of the Property and the Related Property,
including, without limitation, debt service, real estate taxes and
assessments, and maintain insurance and pay and perform obligations under
the Loan Documents) and will not dispose of or encumber any of the
Properties or the Related Property or any part thereof or of the Interests,
except for dispositions of personal property in the ordinary course of
business.
17
Between the Effective Date and the Closing, the Partnership or its
affiliates shall continue to undertake those capital improvements listed on
Schedule 4 with respect to the Properties and the Related Property in the
ordinary course of business.
(b) ACTIONS REQUIRING PURCHASER'S CONSENT. Notwithstanding the above
terms of this Section, the Partnership shall not, without the prior written
approval of Purchaser, take any of the following actions:
(i) LEASES. Execute or renew any Lease; or terminate any Lease;
or modify or waive any material term of any Lease;
(ii) CONTRACTS. Except as otherwise required under this
Agreement, enter into, execute or terminate any operating agreement,
reciprocal easement agreement, management agreement or any lease,
contract, agreement or other commitment of any sort (including any
contract for capital items or expenditures), with respect to the
Property.
(iii) LOAN DOCUMENTS. Waive or modify any material term under any
Loan Document.
(c) COST OF TENANT IMPROVEMENTS AND LEASING COMMISSIONS. In connection
with any new leases or modifications of existing Leases entered into
between the Effective Date and the Closing and approved by Purchaser, the
cost of tenant improvement work and leasing commissions shall be prorated
between Purchaser and the Partnership in proportion to the ratio between
the portion of the new lease term prior to the Closing Date and the portion
of the new lease term after the Closing Date.
13. COOPERATION BEFORE CLOSING. The Partnership and Purchaser shall
cooperate and do such acts as may be reasonably required or requested by the
other with regard to the fulfillment of any Condition Precedent or the
consummation of the transactions contemplated hereby. The Partnership shall not
be required to pay any sums whatsoever in connection with obtaining the consent
of the landlord under the Totem Valley Lease to the assignment of such lease
contemplated hereunder, and the Purchaser shall be primarily responsible for
obtaining such consent. Prior to the Closing, Purchaser will execute and file,
or join in the execution and filing of any application or other document
(including, but not limited to, any filing with the Securities Exchange
Commission) that may be necessary in order to obtain the
18
authorization, approval or consent of any governmental entity that may be
required in connection with the consummation of the Sale, and will use its best
efforts to obtain, or, as applicable, to assist the Partnership in obtaining,
all such authorizations, approvals and consents.
14. NON-CONSUMMATION OF THE TRANSACTION. If the transaction is not
consummated on or before the Closing Date, the following provisions shall apply:
(a) NO DEFAULT. If the transaction is not consummated for a reason
other than a default by one of the parties, then (i) Title Company and each
party shall return to the depositor thereof the ▇▇▇▇▇▇▇ Money and all other
funds and items which were deposited hereunder; (ii) the Partnership and
Purchaser shall each bear one-half of any Escrow cancellation charges. Any
return of funds or other items by the Title Company or any party as
provided herein shall not relieve either party of any liability it may have
for its wrongful failure to close.
(b) DEFAULT BY THE PARTNERSHIP. If the transaction is not consummated
as a result of a default by the Partnership, then Purchaser may as its sole
recourse either (i) terminate this Agreement by delivery of notice of
termination to the Partnership, whereupon (A) the ▇▇▇▇▇▇▇ Money plus
interest accrued thereon shall be immediately returned to Purchaser, and
(B) the Partnership shall pay to Purchaser any actual title, escrow, and
legal fees incurred by Purchaser, but in no event to exceed $15,000, in
which case neither party shall have any further rights or obligations
hereunder; or (ii) continue this Agreement pending Purchaser's action for
specific performance.
(c) DEFAULT BY PURCHASER. If the Closing does not occur as a result of
a default by Purchaser, then (i) Purchaser shall pay all escrow
cancellation charges, (ii) Title Company shall deliver the ▇▇▇▇▇▇▇ Money
together with interest earned thereon to the Partnership as its full and
complete liquidated damages and its sole and exclusive remedy for
Purchaser's default. If the transaction is not consummated because of a
default by Purchaser, the ▇▇▇▇▇▇▇ Money together with the interest accrued
thereon shall be paid to and retained by the Partnership as liquidated
damages. THE PARTIES HAVE AGREED THAT THE PARTNERSHIP'S ACTUAL DAMAGES, IN
THE EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY DIFFICULT OR
IMPRACTICABLE TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS BELOW,
THE PARTIES ACKNOWLEDGE THAT THE ▇▇▇▇▇▇▇ MONEY HAS BEEN AGREED UPON, AFTER
NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF THE PART
19
NERSHIP'S DAMAGES AND AS THE PARTNERSHIP'S EXCLUSIVE REMEDY AGAINST
PURCHASER, AT LAW OR IN EQUITY, IN THE EVENT OF A DEFAULT UNDER THIS
AGREEMENT ON THE PART OF PURCHASER.
INITIALS: Partnership ___ Purchaser ___
15. MISCELLANEOUS.
(a) DISCLOSURE OF TRANSACTION. Except as may be required to comply
with the requirements of any applicable laws (including, but not limited
to, the Securities Act of 1933, as amended from time to time (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended from
time to time (the "Securities Exchange Act")), neither party shall publicly
announce or discuss the execution of this Agreement or the transaction
contemplated hereby except in accordance with the following. The
Partnership shall not publicly announce or discuss the execution of this
Agreement or the transaction contemplated hereby without the prior written
consent of Purchaser, which shall not be unreasonably withheld. Purchaser
shall not publicly announce or discuss the execution of this Agreement or
the transaction contemplated hereby unless Purchaser has obtained the prior
written consent of the Partnership, which shall not be unreasonably
withheld.
(b) POSSESSION. Possession of the Real Property and the Personal
Property shall be delivered to Purchaser upon the Closing.
(c) NOTICES. Any notice, consent or approval required or permitted to
be given under this Agreement shall be in writing and shall be deemed to
have been given upon (i) hand delivery, (ii) one (1) day after being
deposited with Federal Express, DHL Worldwide Express or another reliable
overnight courier service or transmitted by facsimile telecopy, or (iii)
two (2) days after being deposited in the United States mail, registered or
certified mail, postage prepaid, return receipt required, and addressed as
indicated below, or such other address as either party may from time to
time specify in writing to the other.
If to Purchaser: If to the Partnership:
Glenborough Realty Trust Incorporated Prudential-Bache/Equitec
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ One ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to: with a copy to:
Glenborough Realty Trust Incorporated Skadden, Arps, Slate, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(d) BROKERS AND FINDERS. Neither party has had any contact or dealings
regarding the Assets, or any communication in connection with the subject
matter of this transaction through any real estate broker or other person
who can claim a right to a commission or finder's fee in connection with
the Sale contemplated herein. In the event that any broker or finder
perfects a claim for a commission or finder's fee based upon any such
contact, dealings or communication, the party through whom the broker or
finder makes its claim shall be responsible for said commission or fee and
shall indemnify and hold harmless the other party from and against all
liabilities, losses, costs and expenses (including reasonable attorneys'
fees) arising in connection with such claim for a commission or finder's
fee. The provisions of this Subsection shall survive the Closing.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, and
inure to the benefit of, the parties and their respective successors,
heirs, administrators and assigns. Neither Purchaser nor the Partnership
shall have the right to assign its interest in this Agreement. The
Partnership's obligations hereunder and under any document executed by the
Partnership pursuant to this Agreement shall be joint and several.
(f) AMENDMENTS. Except as otherwise provided herein, this Agreement
may be amended or modified only by a written instrument executed by the
Partnership and Purchaser.
(g) GOVERNING LAW. This Agreement has been negotiated and executed in
New York County, New York and the substantive laws of the State of New
York, without reference to its conflict of laws provisions, will govern the
validity, construction, and enforcement of this Agreement.
21
(h) MERGER OF PRIOR AGREEMENTS. This Agreement and the Addenda,
Exhibits and Schedules hereto constitute the entire agreement between the
parties and supersede all prior agreements and understandings between the
parties relating to the subject matter hereof.
(i) ARBITRATION OF DISPUTES. Any controversy, claim, counterclaim, or
disputes between or among the parties hereto arising out of or relating to
the interpretation, application, breach or enforcement of this Agreement or
any related agreements or instruments ("Subject Documents") ("Dispute"),
shall, at the option of any party, and at that party's expense, be
submitted to mediation, using either the American Arbitration Association
(AAA) or Judicial Arbitration and Mediation Services, Inc. (JAMS). If
mediation is not used, or if it is used and it fails to resolve the Dispute
within 30 days from the date AAA or JAMS is engaged, then the Dispute shall
be determined by neutral binding arbitration in accordance with the
Commercial Arbitration Rules then in effect of either JAMS or AAA (at the
option of the party initiating the arbitration) and Title 9 of the U.S.
Code, notwithstanding any other choice of law provision(s) herein or in the
Subject Documents. Any controversy concerning whether a Dispute is
arbitrable shall be determined by the arbitrator(s). The parties agree that
related arbitration proceedings may be consolidated. The arbitrator shall
prepare written reasons for the award. The parties hereto agree that the
arbitrator shall be empowered to grant equitable, as well as legal, relief,
including, without limitation, the power to compel specific performance of
this Agreement. The parties further consent that the initiation of
mediation and/or arbitration pursuant to these provisions shall constitute
an action or the equivalent for purposes of determining a party's right to
file a lis pendens in the official records of the jurisdiction where the
Property is/are located. The parties consent that judgment on the award
rendered may be entered in any state court sitting in New York County, New
York, and that any mediation and/or arbitration shall take place in New
York, New York.
(j) ENFORCEMENT. If either party fails to perform any of its
obligations under this Agreement or if a dispute arises between the parties
concerning the meaning or interpretation of any provision of this
Agreement, then the defaulting party or the party not prevailing in such
dispute shall pay any and all costs and expenses incurred by the other
party on account of such default and/or in enforcing or establishing its
rights hereunder, including, without limitation, arbitration or court costs
and attorneys' fees and disbursements. Any such attorneys' fees and other
expenses incurred by either party in enforcing a judgment in its favor
under this Agreement shall be recoverable separately from and in addition
to any other amount
22
included in such judgment, and such attorneys' fees obligation is intended
to be severable from the other provisions of this Agreement and to survive
and not be merged into any such judgment.
(k) TIME OF THE ESSENCE. Time is of the essence of this Agreement.
(l) SEVERABILITY. If any provision of this Agreement, or the
application thereof to any person, place, or circumstance, shall be held by
a court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other
persons, places and circumstances shall remain in full force and effect.
(m) MARKETING. The Partnership agrees not to market the Assets or
actively solicit competing offers from any other prospective purchasers,
unless the Partnership determines, in its sole discretion, that its
fiduciary duties or applicable law require it to take such actions.
(n) CONFIDENTIALITY. Purchaser and, except as permitted under Section
15(m) above, the Partnership shall each maintain as confidential any and
all material or information about the other or, in the case of Purchaser
and its agents, employees, consultants and contractors, about the Property,
and shall not disclose such information to any third party, except, in the
case of information about the Property and the Partnership, to Purchaser's
investment bankers, lender or prospective lenders, insurance and
reinsurance firms, attorneys, environmental assessment and remediation
service firms and consultants, as may be reasonably required for the
consummation of the transaction contemplated hereunder and/or as required
by law (including, but not limited to, the Securities Act and the
Securities Exchange Act).
(o) COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
(p) ADDENDA, EXHIBITS AND SCHEDULES. All addenda, exhibits and
schedules referred to herein are, unless otherwise indicated, incorporate
herein by this reference as though set forth herein in full.
(q) CONSTRUCTION. Headings at the beginning of each section and
subsection are solely for the convenience of the parties and are not a part
of the Agreement. Whenever required by the context of this Agreement, the
singular shall
23
include the plural and the masculine shall include the feminine and vice
versa. This Agreement shall not be construed as if it had been prepared by
one of the parties, but rather as if both parties had prepared the same. In
the event the date on which the Partnership or Purchaser is required to
take any action under the terms of this Agreement is not a business day,
the action shall be taken on the next succeeding business day.
(r) SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNIFICATIONS.
Except as otherwise expressly set forth herein, none of the
representations, warranties and indemnifications contained in this
Agreement shall survive the Closing.
24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
PARTNERSHIP
Prudential-Bache/Equitec Real Estate Partnership,
a California limited partnership
By Prudential-Bache Properties, Inc.,
a Delaware corporation,
its General Partner
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
Date: October 13, 1997
PURCHASER
Glenborough Realty Trust Incorporated,
a Maryland corporation
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
President
Glenborough Properties, L.P.,
a California limited partnership
By Glenborough Realty Trust Incorporated, a Maryland corporation,
its General Partner
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
President
25
Date: October 9, 1997
26
ADDENDUM I
DEFINITIONS
Terms used in this Agreement shall have the meanings set forth below:
1. ADDITIONAL RENTS. All amounts, other than Fixed Rents, due from any Tenant
under any Lease, including without limitation percentage rents, escalation
charges for real estate taxes, parking charges, marketing fund charges,
reimbursement of operating expenses or common area expenses, maintenance
escalation rents or charges, cost-of-living increases or other charges of a
similar nature, if any, and any additional charges and expenses payable
under any Lease.
2. AGREEMENT. This Agreement between the Partnership and Purchaser, including
all Addenda, Schedules and Exhibits attached hereto and incorporated herein
by reference.
3. AMENDMENTS. The amendment of the Amended and Restated Agreement of Limited
Partnership, dated as of February 11, 1985 and as subsequently amended, by
and among the General Partners and Limited Partners of the Partnership (as
defined therein) to permit (a) the purchase by an affiliate of Glenborough
of the Assets, and (b) the effectuation of the Plan by the Partnership's
General Partners on behalf of the Partnership.
4. ASSIGNMENT AND ASSUMPTION OF LEASE. An Assignment and Assumption of Lease,
without recourse, in form acceptable to the Partnership in its sole
discretion, with respect to the Partnership's interest, as tenant, under
the Totem Valley Lease.
5. ASSIGNMENT OF CONTRACTS. An Assignment and Assumption of Service Contracts,
Guaranties and Warranties and Other Intangible Property in the form of
Exhibit D attached hereto.
6. ASSIGNMENT OF LEASES. An Assignment and Assumption of Leases in the form of
Exhibit B attached hereto.
7. ASSETS. The Property, together with the Interests.
8. ▇▇▇▇ OF SALE. A ▇▇▇▇ of Sale in the form of Exhibit C attached hereto.
ADDENDUM I-1
9. CASH. Immediately available funds to be paid by Purchaser at the Closing,
as provided in Section 3 hereof.
10. CODE. As defined in Section 3(b) hereof.
11. CLOSING. The delivery of the Deeds, and the Assignment and Assumption of
Lease, and the other documents required to be delivered hereunder and the
payment of the Consideration.
12. CLOSING DATE. The first Tuesday that is not less than five days after the
Partnership's receipt of the Consents, subject to extension as provided
herein, but in no event later than December 9, 1997.
13. CONSENTS. The written consent of the Unitholders to the Plan pursuant to
the Solicitation of Consents.
14. CONSIDERATION. The total consideration to be paid by Purchaser to the
Partnership as described in Section 3 hereof.
15. CONTRACTS. The service contracts, construction contracts for work in
progress, any warranties thereunder, management contracts, unrecorded
reciprocal easement agreements, operating agreements, maintenance
agreements, franchise agreements and other similar agreements relating to
the Property or the Related Property, if any.
16. CREDITORS' RIGHTS LAWS. All bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally, as
well as general equitable principles whether or not the enforcement thereof
is considered to be a proceeding at law or in equity.
17. DEED. A quit claim deed or deed without covenants if a quit claim deed can
not be utilized in a jurisdiction where a Property is located; so long as
the Title Company is willing to issue a policy of title insurance which is
customary in the applicable jurisdiction containing no exceptions from
coverage solely out of the delivery by the Partnership of a quit claim deed
or deed without covenants).
18. DEFERRED MAINTENANCE. Those items of deferred maintenance for the
Properties and the Related Property, as shown on Schedule 4 attached.
ADDENDUM I-2
19. ▇▇▇▇▇▇▇ MONEY. An ▇▇▇▇▇▇▇ money deposit paid by Purchaser pursuant to
Section 3 hereof, in the amount of $1,000,000.
20. EFFECTIVE DATE. The date this Agreement is signed by the Partnership or
Purchaser, whichever signs last.
21. ESCROW AGREEMENT. The Escrow Agreement attached hereto as Exhibit G, to be
executed by Title Company, the Partnership and Purchaser simultaneously
with the execution of this Agreement.
22. EXPENSES. All operating expenses normal to the operation and maintenance of
the Property and the Related Property, including without limitation real
property taxes and assessments; current installments of any improvement
bonds or assessments which are a lien on the Property or the Related
Property or which are pending and may become a lien on the Property or the
Related Property; water, sewer and utility charges; amounts payable under
any Contract for any period in which the Closing occurs; permits, licenses
and inspection fees; and interest on the Loan.
23. FIXED RATE PRICE ADJUSTMENT. As defined in the Loan Documents.
24. FIXED RENTS. The fixed periodic rental payments under any Lease.
25. GENERAL INTANGIBLES. To the extent assignable, all general intangibles
relating to design, development, operation, management and use of the Real
Property; all certificates of occupancy, zoning variances, building, use or
other permits, approvals, authorizations, licenses and consents obtained
from any governmental authority or other person in connection with the
development, use, operation or management of the Real Property and all
payment and performance bonds or warranties or guarantees relating to the
Real Property; and all of the Partnership's right, title and interest in
and to any and all of the following to the extent assignable: trademarks,
service marks, logos or other source and business identifiers, used at or
relating to the Real Property.
26. GENERAL PARTNERS. Collectively, Glenborough Corporations, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, and Prudential-Bache Properties, Inc.
27. GLB. Glenborough Realty Trust Incorporated, a Maryland corporation.
28. GPLP. Glenborough Properties, L.P., a California limited partnership.
ADDENDUM I-3
29. GLENBOROUGH. Glenborough Corporation, together with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇.
30. IMPROVEMENTS. All buildings, parking lots, signs, walks and walkways,
fixtures and equipment and all other improvements located at or on or
affixed to the Land to the full extent that such items are owned by the
Partnership and constitute realty under the laws of the state in which the
Land is located.
31. INTERESTS. All of the Partnership's direct and indirect interests in a
joint venture whose sole asset is the Related Property, said Interests
being more particularly described as follows: all right, title and interest
of the Partnership in and to Montrose Office Park Limited Partnership, a
Maryland limited partnership, Montrose Office Park Joint Venture, a
Maryland single purpose general partnership, and Equitec Venture Corp. III,
Inc., a California corporation.
32. INTERESTS TRANSFER DOCUMENTS. An Assignment of Partnership Interests in
Montrose Office Park Limited Partnership and An Assignment of Joint
Venture/General Partnership Interest in Montrose Office Park Joint Venture,
in the form set forth in Exhibits E and F attached hereto.
33. LAND. The land described in Schedule I attached hereto, together with all
appurtenances thereto, including without limitation easements and mineral
and water rights.
34. LEASES. The leases listed in the Rent Roll, together with any leases
approved by Purchaser pursuant to Section 12 hereof.
35. LOAN. The mortgage loan or loans described in Schedule 5 attached hereto.
36. LOAN DOCUMENTS. All notes or other evidence of indebtedness, loan
agreements, mortgages, guaranty agreements, and any and all other documents
entered into by the Partnership and all amendments, modifications and
supplements thereto relating to the Loan.
37. MAJOR LOSS is defined as any damage or destruction to any Real Property or
to the Related Property as to which the cost to repair exceeds 10% of the
Consideration.
38. MINOR LOSS is defined as any such damage or destruction that is not a Major
Loss.
39. PARTNERSHIP. As defined in the recitals hereto.
ADDENDUM I-4
40. PARTNERSHIP'S CONDITIONS PRECEDENT. Conditions precedent to the
Partnership's obligations to consummate this transaction, as set forth in
Section 4 hereof.
41. PB PROPERTIES. Collectively, Prudential-Bache Properties, Inc. and its
affiliates.
42. PERMITTED EXCEPTIONS. The Leases and the exceptions to title set forth on
Schedule 2 hereto.
43. PERSONAL PROPERTY. All of the Partnership's right, title and interest in
and to the personal property and any interest therein owned by the
Partnership, if any, located on the Real Property and used in the operation
or maintenance of the Real Property, including, without limitation, all
licensed software and any personal computer based security system.
44. PLAN. The plan of action, which consists of (i) the Sale, (ii) the
Amendments, and (iii) one or more liquidating distributions to the
Unitholders and the General Partners and, after providing for the payment
of all expenses and other liabilities of the Partnership, the dissolution
and termination of the Partnership and subsequent liquidation.
45. PROPERTY. The Partnership's fee or leasehold interest, as applicable, in
the Real Property, together with the Leases, the Personal Property, the
General Intangibles, and the Contracts.
46. PURCHASER. As defined in the recitals hereto.
47. PURCHASER'S CONDITIONS PRECEDENT. Conditions precedent to Purchaser's
obligation to consummate this transaction, as set forth in Section 4
hereof.
48. REAL PROPERTY. The Land and Improvements.
49. RELATED PROPERTY. That certain real property and improvements located in
Rockville, Maryland, and commonly known as the Montrose Office Park, as
more particularly described on Schedule 6.
50. RELEASE. As defined in Subsection 4(b)(ii) hereof.
51. RENT ROLL. The list of each of the Leases as of the date of this Agreement,
attached hereto as Schedule 3.
ADDENDUM I-5
52. RENTS. Fixed Rents and Additional Rents.
53. SALE. As defined in the recitals hereto.
54. SECURITIES ACT. As defined in Section 15(a) hereof.
55. SECURITIES EXCHANGE ACT. As defined in Section 15(a) hereof.
56. SERVICE CONTRACTS. All Contracts involving ongoing services and periodic
payment therefor, as distinguished from franchise agreements, easements,
guarantees, warranties and the like.
57. SOLICITATION OF CONSENTS. The solicitation of written consents by
Prudential-Bache Properties, Inc. in its capacity as the managing general
partner of the Partnership.
58. TAXES. All net income, capital gains, gross income, gross receipt, sales,
use, transfer, ad valorem, franchise, tariffs, profits, license, capital,
withholding, payroll, employment, excise, goods and services, severance,
stamp, occupation, premium, property, windfall profits or other tax or
customs duties, or any interest, any penalties, additions to tax or
additional amounts incurred or accrued under applicable tax law or assessed
or charged by any taxing authority.
59. TENANT(S). Each and all tenants as listed on the Rent Roll.
60. TITLE COMPANY. Chicago Title Insurance Company, whose address is: ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
61. TITLE POLICY. A policy of extended coverage American Land Title Association
Policy of Owner's Title Insurance (Form B, rev. 10/17/70), issued by Title
Company in the amounts set forth below, subject to adjustment in accordance
with any adjustments in the portion of the Consideration applicable to such
Properties, showing fee or leasehold title, as applicable, vested in
Purchaser subject only to the Permitted Exceptions: Gateway Professional
Center - $4,250,000; Park Plaza - $6,670,000; Totem Valley Business Park -
$7,200,000; Poplar Towers - $5,000,000.
62. TOTEM VALLEY LEASE. Lease dated March 15, 1987, by and between Burlington
Northern Railroad Company, as landlord, and the Partnership, as tenant, as
amended by agreement by and between The Burlington Northern And Santa Fe
Railway Company and the Partnership, a memorandum of which amendment was
recorded on
ADDENDUM I-6
April 9, 1997, which lease relates to "Parcel H" on the legal description
for Totem Valley Business Park, Seattle Washington, set forth on Schedule 1
attached hereto.
63. UNITHOLDERS. As defined in the recitals hereto.
ADDENDUM I-7
EXHIBIT A
ASSIGNMENT AND ASSUMPTION OF LEASES
THIS ASSIGNMENT AND ASSUMPTION OF LEASES ("Assignment") dated as of
______________, 1997, is entered into by and between Prudential-Bache/Equitec
Real Estate Partnership, a California limited partnership ("Assignor"), and
Glenborough Properties, L.P., a California limited partnership ("Assignee").
W I T N E S S E T H:
WHEREAS, Assignor is the lessor under certain leases executed with respect
to that certain real property commonly known as ________________ (the
"Property") as more fully described in Exhibit A attached hereto, which leases
are described in the Rent Roll attached hereto as Schedule 1 (the "Leases"); and
WHEREAS, Assignor has entered into that certain Purchase Agreement (the
"Agreement") by which title to the Property is being transferred to Assignee;
and
WHEREAS, Assignor desires to assign its interest as lessor in the Leases to
Assignee, and Assignee desires to accept the assignment thereof;
NOW, THEREFORE, in consideration of the promises and conditions contained
herein, the parties hereby agree as follows:
1. Effective as of the Closing Date (as defined in the Agreement),
Assignor hereby assigns to Assignee, without recourse, all of its right,
title and interest in and to the Leases, and any guarantees related
thereto.
2. Effective as of the Closing Date, Assignee hereby assumes all of
the lessor's obligations arising after the Closing Date under the Leases
and agrees to indemnify Assignor against and hold Assignor harmless from
any and all cost, liability, loss, damage or expense, including without
limitation, reasonable attorneys' fees, arising out of facts or
circumstances occurring subsequent to the Closing Date and arising out of
the lessor's obligations under the Leases.
3. Any rental and other payments under the Leases shall be prorated
between the parties as provided in the Agreement.
4. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in
interest and assigns.
5. This Assignment shall be governed by and construed in accordance
with the laws of the State of New York.
6. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which taken together shall constitute one
and the same instrument.
IN WITNESS WHEREOF Assignor and Assignee have executed this Assignment the
day and year first above written.
ASSIGNEE ASSIGNOR
Glenborough Properties, L.P., Prudential-Bache/Equitec Real Estate
a California limited partnership Partnership,
a California limited partnership
By Glenborough Realty Trust Incorporated, By Prudential-Bache Properties, Inc.,
a Maryland corporation, a Delaware corporation,
its General Partner its General Partner
By By
----------------------------------- ----------------------------------
Name: Name:
Title: Title:
EXHIBIT A
TO ASSIGNMENT AND ASSUMPTION OF LEASES
REAL PROPERTY DESCRIPTION
SCHEDULE 1
TO ASSIGNMENT AND ASSUMPTION OF LEASES
RENT ROLL
EXHIBIT B
▇▇▇▇ OF SALE
For good and valuable consideration the receipt of which is hereby
acknowledged, Prudential-Bache/Equitec Real Estate Partnership, a California
limited partnership (the "Partnership"), does hereby sell, transfer, and convey
to Glenborough Properties, L.P., a California limited partnership ("Purchaser"),
all personal property owned by the Partnership and located on or in or used in
connection with the Real Property (as defined in that certain Purchase Agreement
relating to the real property, between the Partnership and Purchaser),
including, without limitation, those items described in Schedule 1 attached
hereto.
Dated: _____________, 1997
PARTNERSHIP
Prudential-Bache/Equitec Real Estate Partnership,
a California limited partnership
By Prudential-Bache Properties, Inc.,
a Delaware corporation,
its General Partner
By
--------------------------------------------
its
--------------------------------------
SCHEDULE 1
TO ▇▇▇▇ OF SALE
PERSONAL PROPERTY
EXHIBIT C
ASSIGNMENT AND ASSUMPTION OF SERVICE CONTRACTS,
WARRANTIES AND GUARANTIES, AND OTHER GENERAL INTANGIBLES
This Assignment of Service Contracts, Warranties and Guaranties and
Other Intangible Property ("Assignment") is made and entered into as of _______,
1997, by Prudential-Bache/Equitec Real Estate Partnership, a California limited
partnership ("Assignor"), to Glenborough Properties, L.P., a California limited
partnership ("Assignee"), pursuant to that certain Purchase Agreement (the
"Agreement") between Assignor and Assignee relating to the Real Property (as
defined in the Agreement).
For good and valuable consideration, the receipt of which is hereby
acknowledged, effective as of the Closing Date (as defined in the Agreement),
Assignor hereby assigns and transfers unto Assignee, without recourse, all of
its right, title, claim and interest in and under:
(a) all warranties and guaranties made by or received from any third
party with respect to any building, building component, structure, fixture,
machinery, equipment, or material situated on, contained in any building or
other improvement situated on, or comprising a part of any building or
other improvement situated on, any part of that certain real property
described in Exhibit A attached hereto including, without limitation, those
warranties and guaranties listed in Schedule 1 attached hereto
(collectively, "Warranties");
(b) all of the Service Contracts listed in Schedule 2 attached hereto;
and
(c) any General Intangibles (as defined in the Agreement).
Assignor and Assignee further hereby agree and covenant as follows:
1. Effective as of the Closing Date, Assignee hereby assumes all of
Assignor's obligations under the Service Contracts and agrees to indemnify
Assignor against and hold Assignor harmless from any and all cost,
liability, loss, damage or expense, including, without limitation,
reasonable attorneys' fees, originating on or subsequent to the Closing
Date and arising out of the owner's obligations under the Service
Contracts.
2. Assignor and Assignee shall, at the reasonable request of the other
party, execute, acknowledge, and deliver any further instruments to carry
out effectively the intent of this Assignment.
3. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in
interest and assigns.
4. This Assignment shall be governed by and construed in accordance
with laws of the State of New York.
5. This Assignment may be executed in counterparts, each of which
shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment the
day and year first above written.
ASSIGNEE ASSIGNOR
Glenborough Properties, L.P., Prudential-Bache/Equitec Real Estate
a California limited partnership Partnership,
a California limited partnership
By Glenborough Realty Trust Incorporated, By Prudential-Bache Properties, Inc.,
a Maryland corporation, a Delaware corporation,
its General Partner its General Partner
By By
----------------------------------- -------------------------------
Name: Name:
Title: Title:
EXHIBIT A
TO
ASSIGNMENT AND ASSUMPTION OF SERVICE CONTRACTS,
WARRANTIES AND GUARANTIES, AND OTHER GENERAL INTANGIBLES
REAL PROPERTY DESCRIPTION
SCHEDULE 1
TO
ASSIGNMENT AND ASSUMPTION OF SERVICE CONTRACTS,
WARRANTIES AND GUARANTIES, AND OTHER INTANGIBLE PROPERTY
WARRANTIES AND GUARANTIES
SCHEDULE 2
TO
ASSIGNMENT AND ASSUMPTION OF SERVICE CONTRACTS,
WARRANTIES AND GUARANTIES, AND OTHER INTANGIBLE PROPERTY
SERVICE CONTRACTS
EXHIBIT D
CERTIFICATE OF TRANSFEROR
OTHER THAN AN INDIVIDUAL
(FIRPTA AFFIDAVIT)
Section 1445 of the Internal Revenue Code provides that a transferee of a
U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform Glenborough Properties, L.P., a California limited
partnership, the transferee of certain real property located at _________,
__________, that withholding of tax is not required upon the disposition of such
U.S. real property interest by Prudential-Bache/Equitec Real Estate Partnership,
a California limited partnership (the "Partnership"), the undersigned hereby
certifies the following on behalf of the Partnership:
1. The Partnership is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations);
2. The Partnership's U.S. employer identification number is
▇▇-▇▇▇▇▇▇▇; and
3. The Partnership's office address is Prudential-Bache/Equitec Real
Estate Partnership
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
The Partnership understands that this certification may be disclosed to the
Internal Revenue Service by Purchaser and that any false statement contained
herein could be punished by fine, imprisonment, or both.
Under penalty of perjury, I declare that I have examined this certificate
and to the best of my knowledge and belief it is true, correct and complete, and
I further declare that I have authority to sign this document on behalf of the
Partnership.
Dated: __________, 1997
---------------------------------------
---------------------------------------
on behalf of:
Prudential-Bache/Equitec Real Estate
Partnership,
a California limited partnership
EXHIBIT E
ASSIGNMENT OF PARTNERSHIP INTERESTS
IN
MONTROSE OFFICE PARK LIMITED PARTNERSHIP
The undersigned Assignor (the "Assignor") owns a 99.992% general
partnership interest (the "Partnership Interest") in Montrose Office Park
Limited Partnership, a Maryland limited partnership (the "Partnership") formed
pursuant to that certain Certificate and Agreement of Limited Partnership dated
as of June 13, 1980 and recorded in Liber 5536, at folio 195 in the Clerk's
Office of ▇▇▇▇▇▇▇▇▇▇ County, Maryland, as amended by First Amendment of
Certificate and Agreement of Limited Partnership made as of March 1, 1981, and
as restated by Restated Certificate of Limited Partnership dated October 15,
1984 and as further amended (insert re any further amendments) (the "Partnership
Agreement").
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Assignor hereby transfers and assigns, without recourse,
100% of the Partnership Interest to Glenborough Properties, L.P., a California
limited partnership, including, but not limited to, all of the capital, profits,
losses and distributions of the Partnership and each item of income, loss,
deduction and credit and any other items to which the Partnership Interest is
entitled. The Partnership Interest constitutes all of the right, title and
interest of the Assignor as a partner, general or limited, in the Partnership.
IN WITNESS WHEREOF, the Assignor has executed this Assignment of
Partnership Interest on this ___ day of _______________, 1997.
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP
a California limited partnership
By: Prudential-Bache Properties, Inc.,
a Delaware corporation,
its General Partner
By: ______________________________
Name:
Title:
EXHIBIT F
ASSIGNMENT OF JOINT VENTURE/GENERAL PARTNERSHIP INTERESTS
IN
MONTROSE OFFICE PARK JOINT VENTURE
The undersigned Assignor (the "Assignor") owns a 93.9% General
Partnership interest (the "Partnership Interest") in Montrose Office Park Joint
Venture, a Maryland single purpose general partnership (the "Partnership")
formed pursuant to that certain Joint Venture Agreement dated as of November 12,
1981 and as amended (insert re any further amendments) (the "Agreement").
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Assignor hereby transfers and assigns, without
recourse, 100% of the Partnership Interest to Glenborough Properties, L.P., a
California limited partnership, including, but not limited to, all of the
capital, profits, losses and distributions of the Partnership and each item of
income, loss, deduction and credit and any other items to which the Partnership
Interest is entitled. The Partnership Interest constitutes all of the right,
title and interest of the Assignor as a partner in the Partnership.
IN WITNESS WHEREOF, the Assignor has executed this Assignment of
Partnership Interest on this __________ day of _____________, 1997.
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP
a California limited partnership
By: Prudential-Bache Properties, Inc.,
a Delaware corporation,
its General Partner
By: ______________________________
Name:
Title:
SCHEDULE G
ESCROW AGREEMENT
Agreement made this ____ day of October, 1997 by and among Glenborough
Realty Trust Incorporated and Glenborough Properties, L.P. (Collectively
"PURCHASER"), and Prudential-Bache/Equitec Real Estate Partnership ("SELLER"),
and Chicago Title Insurance Company, Inc., as escrow agent ("ESCROW AGENT").
1. The Parties hereto agree that the sum of $1,000,000 (the "ESCROW
AMOUNT"), to be held pursuant to a Purchase Agreement between Seller and
Purchaser of even date herewith (the "CONTRACT"), shall be held in escrow by the
Escrow Agent upon the terms and conditions set forth herein.
2. (a) The Escrow Agent shall deliver the Escrow Amount then in its
possession in accordance with Paragraph 3 hereof to Seller (i) upon the Closing,
as that term is used in and in accordance with the Contract or (ii) in the event
that Seller makes a written demand therefor stating that Purchaser has failed to
perform Purchaser's obligations under the Contract.
(b) Escrow Agent shall return the Escrow Amount then in its possession
in accordance with Paragraph 3 hereof to Purchaser in the event that
Purchaser makes a written demand therefor stating (i) that Seller has
failed to perform Seller's obligations under the Contract or (ii) that
Purchaser is otherwise entitled to the return of the Escrow Amount in
accordance with the terms of the Contract.
(c) In the event that Escrow Agent intends to release the Escrow
Amount and any interest earned thereon in accordance with Paragraph 3
hereof to either party pursuant to Paragraph 2(a)(ii) or 2(b) hereof, then
Escrow Agent shall give to the other party not less than ten days prior
written notice of such fact and, if Escrow Agent actually receives written
notice during such ten day period that such other party objects to the
release, then Escrow Agent shall not release the Escrow Amount and any such
dispute shall be resolved as provided herein.
(d) In the event that a dispute shall arise as to the disposition of
the Escrow Amount or any other funds held hereunder in escrow, Escrow Agent
shall have the right, at its option, to either hold the same or deposit the
same with a court of competent jurisdiction pending decision of such court,
and Escrow Agent shall be entitled to rely upon the decision of such court.
(e) Escrow Agent may commingle the Escrow Amount with other funds held
in its "trustees account".
(f) Escrow Agent shall hold the Escrow Amount in a savings bank
account or a liquid assets account in the City of Los Angeles bearing
interest at such rate as may from time to time be paid or invest the Escrow
Amount in U.S. Treasury Bills or other securities guaranteed by the
Government of the United States of America. The rate of interest or yield
need not be the maximum available and deposits, withdrawals, purchases and
sales shall be made in the sole discretion of Escrow Agent, which shall
have no liability whatsoever therefor except for its gross negligence or
willful misconduct. Discounts earned shall be deemed interest for the
purposes hereof.
(g) Escrow Agent shall have no liability whatsoever arising out of or
in connection with its activity as Escrow Agent except for its gross
negligence or willful misconduct. Seller and Purchaser jointly and
severally agree to indemnify and hold harmless Escrow Agent from and
against any and all loss, cost, claim, cause of action, damage, liability
and expense (including attorneys' fees and court costs) which may be
incurred by reason of its acting as Escrow Agent.
(h) Escrow Agent shall be entitled to rely upon any judgment,
certification, demand or other writing delivered to it hereunder without
being required to determine the authenticity or the correctness of any fact
stated therein, the propriety or validity thereof, or the jurisdiction of a
court issuing any such judgment. Escrow Agent may act in reliance upon (i)
any instrument or signature believed to be genuine and duly authorized, and
(ii) advice of counsel in reference to any matter or matters connected
herewith.
(i) Any notice, demand or other communication to Escrow Agent
hereunder shall be in writing and delivered in person or sent by certified
mail, return receipt requested, postage prepaid, addressed to Escrow Agent
as follows:
Chicago Title Insurance Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: _______________________
The same shall be deemed given on the date delivered, if delivered in
person, or on the third business day following the date of mailing the same, if
mailed.
3. The interest, if any, earned on the Escrow Amount shall be for the
account of the party entitled to the Escrow Amount hereunder. At the Closing,
such interest shall be a credit against the Purchase Price.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
Purchaser:
Glenborough Realty Trust Incorporated
By:______________________________
Name:
Title:
Glenborough Properties, L.P.:
By Glenborough Realty Trust Incorporated
By:______________________________
Name:
Title:
Seller:
Prudential-Bache/Equitec Real Estate Partnership
By: Prudential-Bache Properties, Inc.,
its general partner
By:______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
Chicago Title Insurance Company, Inc., as Escrow Agent
By:_____________________________
Name:
Title:
SCHEDULE 1
DESCRIPTION OF LAND
Legal Descriptions of the following properties attached:
1. Gateway Professional Center, Sacramento, California
2. Park Plaza, Sacramento, California
3. Poplar Towers, Memphis, Tennessee
4. Totem Valley Business Park, Seattle, Washington
SCHEDULE 2
PERMITTED EXCEPTIONS
Current real property taxes and assessments not yet due and payable, the lien of
any unpaid real property taxes and assessments for periods prior to the period
in which the Closing occurs, standard utility, access, and related easements and
licenses, covenants, conditions and restrictions currently of record, matters
which an accurate survey of the Real Estate would disclose, parties in
possession, all those matters affecting title over which the Title Company would
provide coverage at no additional premium based upon an affidavit from the owner
of the Property (it being expressly understood that the Partnership shall have
no obligation to execute any such owner's affidavit or any indemnity required in
order to remove standard "gap" or "creditors' rights" exceptions to title
coverage), and all other matters affecting title, together with the Leases and
the Loan and any and all other monetary liens affecting the Property or matters
which might result in monetary liens affecting the Property.
SCHEDULE 3
RENT ROLL
SCHEDULE 4
DEFERRED MAINTENANCE
TOTEM POPLAR PARK GATEWAY
Item # VALLEY TOWERS MONTROSE PLAZA GATEWAY EXEC SUITES
--------------- --------------- ---------- ---------- ----------- ----------- --------------
1 1,758 2,751 1,900 79,200 2,100 4,800
2 865 128,000 3,500 76,500 17,400 13,691
3 43,000 3,300 16,900 6,000
4 68,000 5,700
5 257,500 14,000
6 16,400
7 20,000
8 52,000
9 24,200
10 7,800
11
12
TOTAL 2,623 619,651 28,400 155,700 36,400 24,491
--------------------------------------------------------------------------------------------------
GRAND
TOTAL 867,265
PRUDENTIAL/BACHE-EQUITEC REAL ESTATE PARTNERSHIP
DEFERRED MAINTENANCE ITEMS
TOTEM VALLEY
1. Curbing is cracked and deteriorating, and needs replacing at a cost of
$2,705,00. The worst areas were replaced in 1996 at a cost of $1,750.00.
750 s.f. of sidewalks are damaged and require replacement at a cost of
$6,448.27.
PARTIALLY COMPLETED - REMAINING COST EQUALS $1,758
2. City of ▇▇▇▇▇▇▇▇ is requiring all commercial buildings' fire alarm panels
to be monitored per new ordinance in effect July 1, 1997. We will need to
install a monitoring panel in each of seven buildings and provide two
telephone lines to each panel location. In addition to this capital cost,
monthly monitoring service and telephone lines will cost approximately
$58/mo. for each building. These expenses are included in operating costs.
Included in cost are monitoring panels at $5,599.35, installation of 14
telephone lines at $625.
PARTIALLY COMPLETED - REMAINING COST EQUALS $865
POPLAR TOWERS
1. Tenant Signage: Designer signage for renovated floors will include ADA
requirements for tenant doors, common area doors, i.e., rest rooms,
janitors closets and individual floor directories. Approximate cost is $850
per floor for 8 floors.
PARTIALLY COMPLETED - REMAINING COST EQUALS $2,751
2. Rest Room Renovation: Renovation of men's and ladies rest rooms on all
floors. Scope of work to include new tile floors, new vinyl, lighting,
painting of stalls and new sink, fixtures and cabinets. Cost per rest room:
$8,000.
$128,000
1
3. Window Film: The solar film on the east, west, and south sides of the
building was applied 20 years ago. Replace with a P-18 film manufactured by
3M. Clean outside windows at same time.
$43,000
4. Common Area Improvements: Renovation of common areas on all floors. The
common area hallways will cost approximately $8,500 per floor. The scope of
work will include carpet, base, new vinyl, paint, sheet rock over existing
aggregate wall and lower elevator buttons.
$68,000
5. Paint and Seal Exterior of Building: The building's exterior paint
continues to deteriorate, in some areas whole sections have stripped off.
The Aluminum must be stripped of all paint and have a special aluminum
paint applied, the aggregate sealed, and a clear coat applied to the
concrete.
$257,500
6. Electric Panel: Replacement of one each hi and low voltage electrical panel
boxes. The existing panel boxes are obsolete. A floor replacement is
necessary to avoid major power problems in the future. The 2nd and 3rd
floors have been done. 9 floors at $1,822 per floor.
$16,400
7. Asphalt Pavement Repair and Seal: Replacement of deteriorated areas,
removal of oil spills, seal coat and stripe.
$20,000
8. Electronic Ballast: Conversion to electronic ballast and octron bulbs as
the start of a building wide replacement. The retrofit is required by the
new Energy Policy Act. 11 floors at $4,731 per floor.
$52,000
9. Replace canopy at main entrance, refurbish the main lobby area with new
wall covering and paint.
$24,200
2
10. Common Area Stairwells: Paint walls, ceiling and handrails of east and west
stairwell.
$7,800
MONTROSE
1. Installation of fail-safe electric locks on stairwell exit doors per Fire
▇▇▇▇▇▇▇▇ inspection (fire code) for 3202 and 3206.
$1,900
2. Parking Structure - repair precast double T's plus various other structural
repairs to concrete.
$3,500
3. Parking Structure Lights - Repair/replacement of wire cages, light fixtures
and equipment as well as conduit.
$3,300
4. Dumpster enclosure - furnish and install concrete pad and fence area around
dumpsters.
$5,700
5. Cooling tower fill replacements - 4 buildings at $3,500 per building.
$14,000
PARK PLAZA
1. Restroom retrofit for ADA and refurbish for floors 2, 3, 4 and 7 (2
restrooms per floor), including remove and replace flooring and
wallcoverings, replace vanity countertops, new toilet partitions per ADA,
ADA faucets.
$79,200
2. Roof replacement.
3
$76,500
GATEWAY EXECUTIVE SUITES
1. Paint existing tenants' suites not yet renovated.
$4,800
2. Carpet existing tenants' suites not yet replaced.
$13,961
3. Upgrade lobby furniture.
$6,000
GATEWAY PROFESSIONAL CENTER
1. Replace worn out components of security garage gate.
$2,100
2. Restore building facade, which has oxidized and is stained.
$17,400
3. Replace penthouse roof.
$16,900
4
SCHEDULE 5
LOAN
PRUDENTIAL-BACHE/EQUITEC REAL ESTATE PARTNERSHIP
▇▇▇▇▇ FARGO BANK LOAN
$26,650,000 ONE YEAR BRIDGE LOAN
BORROWERS: Prudential-Bache/Equitec Real Estate Partnership, a
California limited partnership; and Montrose Office
Park Joint Venture, a Maryland joint venture
SECURED PROPERTIES: 1. Gateway Professional Center, Sacramento, CA
2. Park Plaza, Sacramento, CA
3. Poplar Towers, Memphis, TN
4. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
5. Montrose Office Park, Rockville, MD
RECORD DATE: December 20, 1996
MATURITY DATE: December 9, 1997
LOAN AMOUNT: $26,650,000
LENDER: ▇▇▇▇▇ Fargo Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇., #▇▇▇
Los Angeles, Calif. 90071
▇▇▇▇▇ ▇▇▇▇▇, Regional Vice President
(▇▇▇) ▇▇▇-▇▇▇▇
INTEREST RATE: LIBOR plus 350 basis points. 30 day LIBOR contracts
automatically set by ▇▇▇▇▇ Fargo Bank. Notice of
each rate set provided by fax to borrower.
LOAN ASSUMPTION: The loan is not assumable.
MONTHLY PAYMENT: Interest only, no amortization. Monthly payment
will vary depending on 30 day LIBOR rate.
AMORTIZATION: None.
DUE DATE OF PAYMENTS: Interest payments are due on the 1st day of each
month with a 15 day grace period.
5
LATE PAYMENT FEES: 4% of the installment due.
PREPAYMENT: The loan is prepayable at any time in full without
penalty (except for LIBOR contract breakage costs,
if any). No partial payments or partial releases.
NON-RECOURSE: The loan is non-recourse to the borrower.
GUARANTORS: Glenborough Corporation and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
have guaranteed the standard non-recourse carve
outs in the loan.
GUARANTOR REPORTING: Within 90 days of fiscal year end, balance sheet and
income statements from the guarantors.
BORROWER FINANCIAL o Property operating statements and rent rolls
REPORTING: within 15 days of the end of each month.
o Balance sheet and income statement for the
borrower within 90 days of the end of the year.
o 1997 budgets by January 1, 1997.
o Certificate of no default with the delivery of the
above statements.
CROSS COLLATERAL: All properties secure the full amount of the loan.
CROSS DEFAULT: The loan is not cross defaulted with any other
financing.
LOAN COVENANTS: o No additional partnership debt without the writ
ten consent of the lender. (Section 7.4)
o No distributions to the limited partners during
the term of the loan without the written consent
of the lender. (Section 7.7)
o Lender approval of all leases over 10,000 s.f.
(Section 7.8)
IMPOUND ACCOUNTS: No impound accounts for taxes, insurance or capital
expenditures.
6
SCHEDULE 6
LEGAL DESCRIPTION OF THE RELATED PROPERTY
Legal Description of Montrose Office Park, Rockville Maryland, attached.